Auto sales and factory orders will be closely watched Tuesday after a surprising decline in a key measure of U.S. manufacturing activity.
The June reading on the ISM manufacturing index Monday was expected to be 52, but it fell to 49.7, under 50 for the first time since July, 2009. A reading under 50 indicates contraction in the manufacturing sector, and the components within the survey were also worrying. New orders, for instance also fell below 50 — to 47.8 — from 60.1 last month, in the worst reading since April, 2009.
Economists caution that just one soft manufacturing number does not indicate a serious dip in the broader economy, but the number did cause concern because it reinforces some other signs of weakness. It also comes ahead of Friday’s June employment report, expected to show possibly that less than 100,000 jobs were created.
“The reports are coming in across the board that makes it more than seasonal. The global slowdown is real,” said Mesirow Financial economist Diane Swonk. “The slowdown in Europe is worse than people thought it would be. The slowdown in China and emerging markets is worse than people thought it would be.”
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